Stock remain nervous over Iraq crisis
Stock remain nervous over Iraq crisis
The Jakarta Post, Jakarta
As a possible war in Iraq becomes increasingly imminent,
uncertainty will continue to cast a shadow over the local equity
market's performance this week, putting the Jakarta Composite
Index under familiar pressure, an analyst has said.
The index will remain depressed this week amid gloomy
sentiment, after the U.S. stepped up pressure to take military
action against Iraq, a Jakarta-based dealer said.
"A war seems to be certain after the U.S. and its allies urged
the UN to set a deadline for Iraq to disarm itself or otherwise
face military strikes," she told The Jakarta Post on Sunday.
Over the weekend, the U.S., Britain and Spain proposed a new
UN resolution that sets a March 17 deadline for Iraq to come to
terms with disarmament demands.
"This has sent negative signals to markets across the world,
including Jakarta, which has been depressed for some time," she
added.
The index in Jakarta closed last week at 389.79 points, a drop
of about 2.5 percent compared to the previous week, with daily
volume averaging 246.35 million shares, worth Rp 178.18 billion
(US$20 million), compared to the average of 205.66 million
shares, worth Rp 154.65 billion, the week before.
If the war fears materialize, markets across the globe would
be negatively affected as it would delay a rebound in the world's
economy or worse, send it into another round of global recession.
Analysts said the impact on Indonesia would be much worse as
the military strikes would likely prompt street protests here by
various quarters, including ones carried out by radical
movements.
This would only shake investor confidence, which in turn would
eventually sink the index further.
Indonesia, the world's largest Muslim country, has been hit by
waves of anti-U.S. rallies over the last couple of years.
In late 2001, following the U.S.-led attacks on Afghanistan,
anti-U.S. rallies flourished. Several foreign firms also had to
temporarily stop operations in response to threats of "sweepings"
made against U.S. interests.
Turning to the currency market, progress in Iraq will also
dominate the issue for the rupiah this week.
Dealers have said that, for now, the market is focusing its
attention on the worsening U.S.-Iraq conflict. They expect the
local unit to hover between Rp 8,875 and 8,950 against the dollar
this week.
The local currency ended last week's trading at Rp 8,880 to
the dollar, relatively unchanged from Rp 8,890 the previous week.